M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Tuesday, October 18, 2011

Insider trading wrap

It looks like the Galleon investigations and trials are wrapping up.  Raj Rajaratnam was sentenced last week to 11 years. Danielle Chiesi just started her 30 month sentance at "Camp Cupcake".  Octopussy got 10 years, and his fellow small fish (Cutillo, Goldfarb, etc) got prison terms ranging from 2.5 to 3 years.  The prosecutors wanted to send a message about insider trading and it's fair to say that ... well ... message sent.  With the help of data collected by the WSJ, I generated the sentencing chart below:

It seems pretty clear that the sentences generated in the Galleon cases while not outrageous, are stiffer than the norm since 1992. It's worth noting the other 10 year insider trading sentence handed out went to Hasif Naseem who orchestrated a ring with friends overseas to trade ahead of pending merger announcements in the following transactions: TXU Corp., Hydril Company, Trammell Crow Co., John Harland Col, Energy Partners Ltd., Veritas DGC Inc., Jacuzzi Brands, Caremark Rx, Inc., and Northwestern Corporation. So, the Rajaratnam sentence, though heavy, may not be entirely at odds with sentences handed out in similar cases in recent years. 



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